Low, simple, compulsory let's start again with the taxes on savings
CHRISTOPHER FILDES
Nigel Lawson thought that taxes should be low, and simple, and compulsory. What a shame that he never got round to reforming the taxes on savings. Few chancellors are tax reformers, and the next to come was Gordon Brown, at whose christening some wicked fairy caused the gift for simplification to be passed to him the wrong way up. His approach to tax is manipulative, his last Finance Act was the fattest on record, and he has even contrived to make capital gains tax more complicated, twice. The only beneficiaries are the tax accountants, and even they have begged him to lay off. Now his shadow chancellor, Michael Portal°, has homed in on savings, promising not to tax the income that they bring to those of modest means. Having got so far, he ought now to promise to take his billhook to the tangled jungle of obsolete incentives and aimless penalties which now serve as a tax code for savings. He should ask why somebody who puts his savings into shares should be taxed on his gains at the highest rate in the developed world (yes, Nigel Lawson set it) when his pension fund can own the same shares and its gains are free of tax. Why should the whole system be slewed towards indirect ownership — through life assurance, for example, with all the costs and obfuscation that go with it? Come to that, when a life policy finally pays off, why should its owner be forced to buy an annuity, whether he wants one or not? Why not a tax code that treats all forms of long-term savings alike? Mr Portillo need only reach into the toy-cupboard. The models are all there. They want a chancellor to take them out and set them working.
Cut and thrust
IT IS not as if the taxes on savings brought much money to the Chancellor. The yield on capital gains tax would just about cover a day of Gordon Brown's projected spending, and inheritance tax would be good for the next day. Since Mr Portillo's party is pledged to match those spending plans, he has had to look around for cuts he could afford. President Bush's approach is less constrained: 'My plan doesn't tell families how to spend their money. It doesn't single out some Americans for relief while leaving others out. It's tax relief for everybody who pays taxes.' Like that, they can be low and simple and compulsory. NOT so long ago the members of the Equitable Life Assurance Society could have named their own price for their business. Now they can be grateful to learn that the Halifax wants to take over its assets. They must keep their fingers crossed, for this deal has a long way to go and will be crucially dependent on two polls of the two different classes of policyholders — those who took the guarantees dished out so freely by the Equitable's salesmen, and those who were left with the bills. It comes with a sigh of relief from the Financial Services Authority and with the recommendation of the Equitable's board. Who? Yes, the same hapless troupe who misdirected the society so thoroughly and have now offered to move over when successors can be found. Answers on a postcard, please, to Egon Zehnder, the headhunters. Might Sir Brian Pitman, now that he is standing down as chairman of Lloyds Bank, be persuaded to come on board, just for the ride? Lord (Terry) Burns has been volunteered for one dirty job after another since he left the Treasury — first foxhunting, then the National Lottery — so could he be coaxed to do one more? What this recommendation needs is some credible signatures on it, and quickly.
Devil's Island
DREYFUSES seem to be thick on the ground these days, with Peter Mandelson cast against type for the part, but the City's version is Bernard Fleurose. His case is that four years ago, as a young trader at JP Morgan, he did what his boss told him and was sent to Devil's Island, or rather to the Isle of Dogs, lair of the financial regulators who condemned him. He fought them in front of their own tribunals, lost on two counts but won on another, and next month will challenge them in the High Court, where a
judge has ruled that he has an arguable case under the new law on human rights. The trouble is that all this fighting comes expensive, and though the regulators can afford it — they can always charge more fees — his legal bills of £190,000, and the regulators' demand for costs which run into six figures, have exhausted his and his parents' means. He has applied for legal aid but his file seems to be meandering through the system, and Joe Egerton at Justice in Financial Services (61 Pall Mall, London SW1) is raising a fund for him. I do not prejudge his case, but its history shows how the regulators can threaten anyone who challenges their rulings with financial ruin. Others with fair cases of their own have chosen not to fight them.
International Audibles
BRITISH Invisibles has had more reviews than The Graduate, though the export promotion director who could have played Mrs Robinson disappeared at the previous castchange. Now Lord Levene, who was brought in as chairman to get the show back on the road, has prescribed a new board, new funding, new membership, new focus, new offices, a new chief executive and a less eccentric name: International Financial Services London. Financial services have been earning our keep in the world for a long time now, and this is the nearest thing they have to an export board, but now that the City is an offshore financial centre on the Thames's banks and Lord Levene himself is chairman of Deutsche Bank Investment Banking Europe, the promoters must move with the times. They are on good terms with Scottish Financial Enterprise, which in some ways has shown how the job can be done. I urge Lord Levene to speak up for his members and engage in debate on the policies that matter to them. BI once did that but somehow lost its voice. Now I look forward to International Audibles.
Monsieur Numero
THE Swiss banker was shocked. Round the City lunch table, after the port, came the visitors' book, and I saw his eyes widen. 'You mean to say,' he asked our host, 'that you expect your customers to sign their names?'
Previous page
